Is Bigger Really Better? Hershey’s Takeover of Scharffen Berger Chocolates

Scharffen Berger chocolate bars

Julia Child, the woman who brought French cooking alive in America, once said that Scharffen Berger chocolate was the best chocolate she had tasted in the United States. Just as Child had sought to bring the finest French cooking techniques to kitchens across America, Scharffen Berger, founded in 1997, sought to bring the experience of the finest European craft chocolate to American consumers. Due in part to its early founding date, but also because of its high profile supporters like Julia Child, Scharffen Berger in many ways became the quintessential American craft small batch chocolate (Nelson). As the small company’s success and profile grew, it did not go unnoticed by the quintessential American big chocolate company – Hershey. In 2005, looking to expand their arm in the craft chocolate market, Hershey purchased Scharffen Berger (Lubow). As a result of the Hershey takeover, and to the disappointment of craft chocolate enthusiasts, Scharffen Berger has faced tangible ethical labor, and production problems surrounding its chocolate, and has handled these real problems with public relations solutions, rather than tangible ones.

Scharffen Berger was founded by an unlikely pair, a doctor and a winemaker, who were both looking for a change in their lives. In 1989, Robert Steinberg, a San Francisco based doctor, was diagnosed with terminal cancer, and told that it was likely he only had 10 years left to live. Feeling the pressure of time, he sold his medical practice and traveled around Europe, where his adventures included two weeks interning at French chocolatier, Bernachon, where he fell in love with the craft chocolate industry (Nelson). Upon returning to California, Steinberg teamed up with a former winemaker who had just sold his vineyard and was looking for a new job in the fine foods industry, John Scharffenberger (“Our Story”). The two new chocolatiers started experimenting in Steinberg’s kitchen, using only a coffee grinder, mortar and pestle, and a hair dryer as equipment to develop craft chocolate recipes and processes. The company’s start was, therefore, quite literally small – 2 men, 1 kitchen, and chocolate batches small enough to fit into a kitchen pot (Nelson).

By 1997, Steinberg and Scharffenberger had opened their first factory, located in South San Francisco, under the name Scharffen Berger chocolates. To create their chocolate, they used a melangeur to grind carefully sourced beans into chocolate liquor, and then they mixed that liquor with cane sugar and vanilla beans. Due to the minimally added extra ingredients, the flavor of the cacao beans greatly impacted the flavor of the chocolate – just as the flavor of grapes would affect the taste of a good wine (Nelson). The chocolate grew quickly in popularity in the Bay Area and beyond, and after only 4 years. Scharffen Berger had moved operations to larger factory in Berkeley with close to 150 employees (Lubow).

A melangeur from the Scharffen Berger factory in Berkeley, CA

Scharffen Berger was only the second craft chocolate maker in the United States, and the company is widely believed to have “kick started” a small batch craft chocolate movement across the country, as “high end artisanal chocolate became the fastest growing sector of the market” (Lubow). This success did not go unnoticed by American big chocolate, and Hershey began to look into buying Scharffen Berger in order to gain access to the gourmet market, which spokespeople for the Hershey Company at the time described as “very on trend” (Sarkar). Hershey succeeded in buying the craft chocolate company in 2005, at which point it was announced that no Scharffen Berger employees would be fired, and the company would continue to produce its high end chocolate with uncompromised quality, just in larger quantities because of the expansion opportunities offered by Hershey ownership (Sarkar).

Hershey’s purchase of Scharffen Berger was not met with open arms in the growing craft chocolate community – a community Scharffen Berger had helped to found (Lubow). While some reviewers, like Arthur Lubow of the New York Times, complained that the taste quality of the chocolate decreased after Hershey’s purchase, the complaints surrounding taste never really gained traction in the market. The much more concerning, and tangible, issue to the chocolate world seemed to be the changes in Scharffen Berger ethical labor and production practices after they were purchased by Hershey.

Despite Hershey’s promise not to lay off any Scharffen Berger employees when they took over the company, in 2009 Hershey announced that it would close down the Scharffen Berger plant in Berkeley, CA, lay off all of its 150 workers, and move all production to a factory in Illinois. The move was completed by late 2009, and done very quietly because Scharffen Berger had become a local Bay Area institution, and removing it, and the jobs it provided to the community, was bound to be an unpopular move (Lubow). Like most craft chocolate makers, Scharffen Berger had a very strong local footprint; all its employees were from the Bay Area, and that is where it saw its highest sales. This is likely why the backlash against the factory relocation was particularly strong in the San Francisco press (Colliver). One former San Francisco Scharffen Berger employee said of the production move, “I’m glad Robert [Steinberg, one of the co-founders of Scharffen Berger] is not alive to see this. If the lymphoma hadn’t taken him, this would have” (qtd. in Colliver).

The outside of the Berkeley, CA Scharffen Berger factory that was closed by Hershey in 2009

The tangible problems with the Scharffen Berger’s move from San Francisco to Illinois were greater than outrage and job loss in the local San Francisco community, because the move had the potential to impact the brand nationally and globally – not just locally. Scharffen Berger’s brand image had been built around the idea of a locally based craft chocolate company – with the local production providing a critical part of the appeal to chocolate aficionados (Williams and Eber 157). Scharffen Berger was marketed as a San Francisco born and bred company – it had been founded by two San Franciscan’s in a San Francisco kitchen and all production had always taken place in the Bay Area. However, after the relocation to Illinois, this was no longer true.

In order to deal with the tangible problem of leaving their local community, and laying off long time company workers, Hershey focused on continuing to market Scharffen Berger as an independent San Francisco company, even though it longer had any labor commitment to, or community involvement with, the Bay Area. On the Scharffen Berger website, there are photos of the Golden Gate bridge, the most iconic San Francisco landmark. There is no mention of the fact that production takes place in Illinois, and the word Hershey only appears once – halfway down the Our History page (“Our Story”) Therefore, in order to address the tangible concerns about abandoning the Scharffen Berger San Francisco base and employees, Hershey fell back on surface level public relations strategies, rather than looking towards tangible solutions, like a continued investment in the San Francisco community.

Beyond just concerns about the local San Francisco labor base of Scharffen Berger, the craft chocolate community also became very concerned that as Scharffen Berger cacao beans became sourced through Hershey’s large supply chain, that it would lack the guarantee that the chocolate was produced without unethical forced child labor. American craft chocolate makers pride themselves, and find their consumer niche, in and because of direct and transparent trade, a commitment to the local, high quality organic beans, a stand against forced labor conditions, and producing a chocolate that tastes nothing like mass market brands. Therefore, labor concerns are critically important – by some accounts almost as important as taste, to high-end chocolate consumers (Williams and Eber 156). Child labor, while not occurring in overwhelmingly large quantities, is still a persistent and important concern when it comes to ethically sourced cacao beans.

While other craft chocolate makers, many of whom now engage in direct trade in small quantities, can ensure that no unethical labor goes into their product, Scharffen Berger, because they are a part of the larger Hershey sourcing operation, is unable to certify that no forced child labor goes into their product. Due to this, advocacy groups, lead by the Raise the Bar Hershey Campaign, worked to get Scharffen Berger removed from the shelves of Whole Foods and other retailers of fine chocolate. In October of 2012, Whole Foods announced that it would remove all Scharffen Berger chocolate from its shelves until Hershey could certify that it was ethically sourcing its chocolate (“Whole Foods”).

The same day that Whole Foods announced it was pulling Scharffen Berger chocolate from its shelves, Hershey responded by saying that it would “source 100 percent certified cocoa for its global chocolate product lines [including Scharffen Berger] by 2020” (qtd. in Neiburg). In 2014, Hershey announced that Scharffen Berger subdivision of the company had already reached its goal of 100% certified cacao – 6 years early. However, the third party authenticator that Hershey used to certify Scharffen Berger cacao was the Rainforest Alliance. While the Rainforest Alliance does good work in certifying that farms are eco-friendly and use sustainable farming methods, they do not provide any checks or certifications about child labor (“Wonderfully Complicated”). Therefore, while Scharffen Berger chocolate now features the Rainforest alliance seal on all chocolate bars and has publically announced that all of its chocolate is 100% certified, it has yet to take any tangible steps to prevent the use of unethical child labor (“Rainforest Alliance Certified”). While the environmental commitment is admirable, placing the green frog label on Scharffen Berger and calling the chocolate 100% certified as a result does not actually solve the unethical labor problems with the Hershey supply chain – it’s a public relations solution to a tangible child labor problem.

The Rainforest Alliance logo that now appears on Scharffen Berger chocolate bars

Thus, since Hershey took over Scharffen Berger, several labor and production problems have arisen pertaining to big chocolate control over a company that prides itself on being craft. However, instead of facing those problems head on, Hershey has pursued public relations solutions that seek to improve Scharffen Berger’s interface with consumers, not actually address the problems. This begets the larger question, can fine craft chocolate maintain its craft character if it is owned by big chocolate – or is the mismatch of values and goals too large for the two ever to co-exist? Likely, the next 10 years of the Hershey – Scharffen Berger partnership will help to answer this question, and provide a model – or a warning story – for craft chocolate expansion in the United States going forward.

Works Cited

Colliver, Victoria. “Scharffen Berger, Schmidt Plants to Be Closed.” SFGate. San Francisco Chronicle, 28 Jan. 2009. Web. 05 May 2015.

Crawford, Travis. Scharffen Berger Chocolate Makers in Berkeley, CA. 2006. Berkeley.

Diglloyd. Scharffenberger Chocolate, Tasty as It Gets. 2008. N.p.

Lubow, Arthur. “My Chocolate Meltdown.” The New York Times. The New York Times, 21 Nov. 2009. Web. 03 May 2015.

Nieburg, Oliver. “Hershey Announces Plans to Use 100% Certified Cocoa by 2020.” Business and Human Rights Resource Center, 5 Oct. 2012. Web. 05 May 2015.

Nelson, Valerie J. “Robert Steinberg Dies at 61; Founded Chocolatier Scharffen Berger.” LA Times OBITUARIES. LA Times, 28 Sept. 2008. Web. 4 May 2015.

“Our Story.” Scharffen Berger. Hershey, n.d. Web. 3 May 2015.

Praefcke, Andreas. Scharffen Berger Factory 2. 2008. Wikimedia Commons. Web.

Reynolds, Leo. CERTIFIED RAINFOREST ALLIANCE EST 1987. 2009.

Rot, Peter. “Scharffen Berger Chocolate.” The Nibble. Lifestyle Direct, Sept. 2008. Web. 03 May 2015.

Sarkar, Pia. “Hershey Is Going Gourmet / Candy Giant Buys Berkeley Chocolatier Scharffen Berger.” SFGate. San Francisco Chronicle, 26 July 2005. Web. 04 May 2015.

“What Does “Rainforest Alliance Certified™” Mean?” Rainforest Alliance, Web. 5 May 2015.

“Whole Foods Drops Hershey’s Scharffen Berger Chocolates Over Child Labor Issues.” Newsroom. Green America, 3 Oct. 2012. Web. 05 May 2015.

Williams, Pam, and Jim Eber. “To Market, To Market: Craftsmanship, Customer Education, and Flavor.” Raising the Bar: The Future of Fine Chocolate. Vancouver: Wilmor, 2012.

“Wonderfully Complicated: Scharffen Berger Chocolate Maker Announces Four New Chocolate Bars.” PR Newswire, 9 July 2014. Web. 05 May 2015.

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